EXTON, Pa.--(BUSINESS WIRE)--Innovative Solutions & Support, Inc. (“IS&S” or the “Company”) (ISSC)
today announced its financial results for the second quarter of fiscal
2018 ended March 31, 2018.

For the second quarter of fiscal 2018, the Company reported net sales of
$3.7 million, compared to second quarter fiscal 2017 sales of $4.7
million. The Company reported a net loss of $1.3 million, or ($0.08) per
share, for the second quarter of 2018 compared to net income of $5.9
million, or $0.35 per share, in the second quarter a year ago. Second
quarter 2017 profitability benefitted from a $3.6 million reduction to
selling, general and administrative expenses as well as $4.1 million in
other income, both arising from the settlement of a lawsuit.

Geoffrey Hedrick, Chairman and Chief Executive Officer of IS&S, said,
“We continue to invest in new product research and development which we
believe will enable the Company to sustain growth over the long term.
These efforts yielded our second STC in just the last few quarters; a
standalone Autothrottle for the PC-12 that can be installed and operated
without upgrading the cockpit display system, thereby proving a highly
cost-effective upgrade solution. Work has begun on the development of a
standalone Autothrottle for the King Air, which we believe can greatly
expand our total market opportunity for Autothrottle. We expect that it
should be a straightforward task to complete the development and obtain
an STC on the King Air, which would then make IS&S the sole source for a
standalone Autothrottle for this aircraft. In the near term we continue
to focus on our strategy to increase both revenues and backlog.”

Subsequent to March 31, 2018, the company intends to use $2.4 million of
cash to acquire a King Air airplane to be used in research and
development activities.

At March 31, 2018, the Company had $23.4 million of cash on hand.

New orders in the second quarter of fiscal 2018 were $4.2 million and
backlog as of March 31, 2018 was $3.8 million. Backlog excludes
potential future sole-source production orders from products in
development under the Company’s engineering development contracts,
including the Pilatus PC-24, and the KC-46A, all of which the Company
expects to remain in production for a decade following completion of
their respective development phases. The Company expects that these
contracts will add to production sales already in backlog.

Shahram Askarpour, President of IS&S, added, "The increase in both
revenues and backlog in the second quarter is consistent with our
expectation for steady improvement compared to the first quarter. The
number of aircraft benefitting from our many products is increasing.
Consequently, we continue to see an increase in repeat, intra-quarter
book-and-ship business from customers, as well as solid demand for
customer service arising as our installed base of products expands. Over
the last several quarters we have maintained our commitment to research
and development, which has enabled us to introduce a number of new
products, including the first Autothrottle for turboprops integrated
with our display system, and now a standalone Autothrottle. We are
confident that our strategy to develop innovative technologies that
improve safety, situational awareness and reduce the cost of operation
is building long-term shareholder value.”

Six Months Results

Total sales for the six months ended March 31, 2018 were $6.8 million,
compared to $ 8.0 million for the six months ended March 31, 2017. For
the six months ended March 31, 2018, the net loss was $2.2 million
compared to net income of $4.7 million for the first half of fiscal
2017. Six months results for fiscal 2017 reflect the unusual items
recognized in the second quarter as described above.

Conference Call

The Company will be hosting a conference call on Thursday, May 10, 2018
at 10:00 a.m. ET to discuss these results and its business outlook.
Please use the following dial in number to register your name and
company affiliation for the conference call: 877-883-0383 and enter the
PIN Number 2478592. The call will also be carried live on the Investor
Relations page of the Company web site at www.innovative-ss.com.

Certain matters contained herein that are not descriptions of
historical facts are “forward-looking” (as such term is defined in the
Private Securities Litigation Reform Act of 1995). Because such
statements include risks and uncertainties, actual results may differ
materially from those expressed or implied by such forward-looking
statements. Factors that could cause results to differ materially from
those expressed or implied by such forward-looking statements include,
but are not limited to, those discussed in filings made by the Company
with the Securities and Exchange Commission. Many of the factors that
will determine the Company’s future results are beyond the ability of
management to control or predict. Readers should not place undue
reliance on forward-looking statements, which reflect management’s views
only as of the date hereof. The Company undertakes no obligation to
revise or update any forward-looking statements, or to make any other
forward-looking statements, whether as a result of new information,
future events or otherwise.

Innovative Solutions and Support, Inc.

Consolidated Balance Sheets

March 31,

September 30,

2018

2017

(unaudited)

ASSETS

Current assets

Cash and cash equivalents

$

23,438,543

$

24,680,301

Accounts receivable

2,373,627

2,748,597

Unbilled receivables

926,629

1,480,822

Inventories

4,440,542

4,179,654

Prepaid expenses and other current assets

951,249

1,092,064

Total current assets

32,130,590

34,181,438

Property and equipment, net

6,588,808

6,669,011

Other assets

185,700

187,315

Total assets

$

38,905,098

$

41,037,764

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities

Accounts payable

$

1,390,535

$

1,321,251

Accrued expenses

1,554,859

1,760,037

Deferred revenue

220,245

280,354

Total current liabilities

3,165,639

3,361,642

Non-current deferred income taxes

129,574

67,742

Total liabilities

3,295,213

3,429,384

Commitments and contingencies (See Note 6)

Shareholders' equity

Preferred stock, 10,000,000 shares authorized, $.001 par value, of
which 200,000 shares are authorized as Class A Convertible stock.
No shares issued and outstanding at March 31, 2018 and September
30, 2017